Boston College, Carroll School of Management

All About LinkedIn

History

The founders of LinkedIn included venture capitalist Reid Hoffman, product designer Allen Blue, marketing professional Konstantin Guericke, engineer Eric Ly, and engineer Jean-Luc Vaillant. The website was launched on May 5th, 2003 in Mountain View, California after being founded and worked on in Hoffman’s living room in late 2002. It is a business and employment oriented social network that operates on both mobile devices (February 2008) and on a website. LinkedIn entered a crowded social media market, but was able to successfully achieve market leadership by leveraging well-targeted users to drive early adoption. LinkedIn’s network effect, as more and more users joined the site, increased its value and drove market penetration.

LinkedIn became the only player and leader in the world of online networking.

While working at Apple Computer in 1994, Reid Hoffman began attempting to create social networks. After working on eWorld and SocialNet.com (which some say was the first online social network, Mark Zuckerberg was in middle school), and as one of the first employees at PayPal, Hoffman established LinkedIn with a few of his colleagues in 2003. He is said to be a part of the “PayPal Mafia” those who previously worked at PayPal but went on to create their own technology companies. Hoffman and his colleagues wanted to “create something big and affect the world.”

Jeff Weiner has been the CEO since December 2008. He previously worked at Accel Partners, Greylock Partners, and spent over seven years at Yahoo!. Weiner has grown quite the “employee fan base” and thinks that being mindful of others, self-aware, and understanding how others are feeling are all attributes of being a great leader. In 2009, Weiner brought clarity and focus to the mission, values and strategic priorities of LinkedIn. Weiner likes working with people who “Dream Big, Have Fun, and Get Sh** Done.”

Values, Mission & Culture

Some employees at “Culture Camp”

A huge factor of LinkedIn’s success has been through the values, mission and culture it prides itself on. LinkedIn’s mission is to “connect the world’s professionals to enable them to be more productive and successful.” They pride themselves on their culture, which they believe sets them apart as the company’s “collective personality.” Culture increases productivity and collaboration and attracts the most talented individuals out there to LinkedIn. LinkedIn takes many steps to ensure there is a “ripple effect” with respect to their culture so that they can retain their talent as well.

LinkedIn has been recognized globally on The World’s Most Ethical Companies 2017, Glassdoor’s Best Places to Work 2017, Best Workplaces for Commuters 2017, Best Places to Work for LGBT Equality 2017. These recognitions reiterate just how important the company culture is for its employees and the overall success of the firm.

Revenue Streams, Becoming a Leader, & The Road to Profitability

LinkedIn has a diverse business model, with three separate operating segments. The largest segment is Talent Solutions, followed by Premium Subscriptions and Marketing Solutions. Products underneath Talent Solutions include Job Slots, LinkedIn Recruiter, LinkedIn Career Pages and LinkedIn Recruitment Media. The revenue from Premium Subscriptions is brought about by the users that pay LinkedIn fees for more access on the website with respect to networking resources and profiles. There are multiple types of Premium Subscriptions available to users, categories including “Power your professional life”, “Accelerate your career,” “Find Talent” (Recruiter Lite), and “Drives Sales” (Sales Navigator). Marketing Solutions is LinkedIn’s marketing and advertising revenue from providing a publishing platform and then monetizing the content.

LinkedIn uniquely positioned itself as the only platform for online networking and differently than other social networking sites, doesn’t rely solely on advertising to generate revenue. The largest revenue segment, Talent Solutions is used primarily for corporations and their recruiting teams to find candidates for the jobs they are hiring for. Marketing Solutions revenue is from the display banner advertisements that you see on the site. When LinkedIn first began in 2003, it shared an office with Friendster, and for many years ran ads only on Friendster. Certainly things have evolved since then, and now advertisements will fall under a variety of categories including, Text Ads, Sponsored Content, Sponsored InMail, and Dynamic Ads.

A LinkedIn ad on Friendster

LinkedIn creates value based upon its content, and the data users provide to them when creating a profile. The site knows where you went to school, who you went to school with, your age and potential demographics, where you work, who you work with etc. It then uses algorithms to suggest business connections and jobs based upon your profile. Data analytics are used heavily enabling users to learn more about the company job postings are for, in addition to who works there and potential connections they may have with the firm.

LinkedIn was not profitable until 2010, however, 2010 was an exceptional year of hyper-growth and acceleration. LinkedIn’s total revenue in 2010 was $243 million, and its net income was $15.4 million. LinkedIn was able to add value to all applications related to professional people search. Since then, revenue has mainly been in the green and the company has become more and more profitable. The platform created a network, ultimately enabling users to be able to find other professionals and be contactable.

IPO and Microsoft’s Purchase

LinkedIn announced its intention to file for an IPO in January of 2011, hit the 100 Million user mark in March 2011, and went public on May 19th, 2011. LinkedIn priced its initial public offering at $45 dollars a share. The stock, however, opened at $83 dollars and quickly rose above $90 throughout the Thursday morning. The stock hit an all time high of $122.70 before closing at $94.25. LinkedIn was valued at $9 billion and the company raised more than $350 million in the offering, one of the largest tech IPOs since Google in 2004.

Executives of LinkedIn at the NYSE on 5/19/11

Microsoft and LinkedIn announced the acquisition closed on December 8th, 2016 for $26.2 billion dollars. Weiner wrote to the team, “We’ve been able to see first-hand the level of innovation being driven at scale — in artificial intelligence, machine learning, the cloud, devices, and more.” Reid Hoffman joined Microsoft’s board as a venture capitalist with a strong reputation and deep connection to Silicon Valley. This move was extremely strategic for Microsoft, as Hoffman has the ability to leverage his network and work to raise Microsoft’s profile in the competitive industry. As of April 2017, LinkedIn brought in $1 billion dollars in revenue to Microsoft’s most recent quarter.

Conclusion

There seems to be no signs of growth slowing down for this incredible company. I am excited to see where the partnership between LinkedIn and Microsoft heads over the next few years. I’m curious as to how you guys use LinkedIn, and what you perceive of the company? Comment below!

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11 thoughts on “All About LinkedIn”

Great post, Michelle! I had no idea that LinkedIn generated so much revenue and that it took them about eight years to even be profitable. I remember seeing their ads on the Internet when I was younger. Little did I know, I would make my own LinkedIn and even find some great content on there when I came to college. Their culture seems amazing and I would love to work in an environment like that in the future. I wonder what kind of new services they will add as they grow.

Interesting post! It’s amazing to see how much the synergy between two big companies like Microsoft and LinkedIn could bring in terms of revenue. Also, I really liked reading the article from the CEO Jeff Weiner because I could see how LinkedIn could become one of best working places in the world. Even I thought I wanted to become someone whom others want to work with–self motivation! By just reading that article, I instantaneously got the feeling that LinkedIn truly encourages self-motivation instead of forcing people to become a certain way. Thanks for the great post!

Its truly amazing how much data that LinkedIn has about all of us, and what it is able to do with it. I also really like how even thought they expanded in the time of Friendster, they moved away from the Ad Revenue model. And $1B in revenue is not a small number, truly incredible when most of the info they gain is voluntarily given! Now, even people who shun our generations obsession with Facebook/Instagram are on LinkedIn. Really interested to learn more about the company culture, it looks like a work hard, play hard environment! Great job!

Nice, thorough post, Michelle! I definitely didn’t know just how big of a company LinkedIn is and its journey to get where it is today. I think one of LinkedIn’s strengths is that it has made its platform a necessity in the working world for people employed or looking for work in every industry. Becoming so universally used across the board, with people like my dad who has been at the same job his entire career and people like me who are just starting to look for internships on the same platform, helps ensure the network’s success. The fact that the largest source of revenue is the Talent Solutions segment instead of advertising also helps LinkedIn distinguish itself.

I thought your presentation today was awesome – it gave a great overview of LinkedIn’s purpose, culture, vision, and recent changes. Building off of that, then, this post really gets deeper and examines the company on a deeper level. I never would have guessed that its Talent Solutions division brings in more profitability than its premium accounts. I’m also surprised, given the company’s size, that such profits hadn’t begun to emerge until 2010. Now that they’ve established a consistent revenue stream, however, I’m excited to see where they go next!

Hey Michelle! I really enjoyed reading the section about LinkedIn’s company culture and their values of openness, honesty, and excellence. The fact that they’ve been recognized as one of the world’s most ethical companies is a pretty big deal in itself, but it’s even more incredible that they’re able to maintain such a high standard in a field where it’s so common to act unethically (take Uber, for example).
Thanks for the informative post, and great job on Wednesday!

Michelle, fantastic post and presentation! LinkedIn is a company I have done extensive research on for internships, and I find it a fascinating organization. I encourage you to continue learning from their CEO, Jeff Weiner. He has been a point of inspiration for me, and I will never forget scrolling through LinkedIn one day at work and finding a post from a summer intern describing his awesome experience at LinkedIn. Weiner commented on his post, encouraging him to come back and how much the firm loved having him over the summer. It is truly rare to find a CEO who cares this much about every single employee, including interns! I found an awesome article about his leadership philosophy if you’re interested see the link below. Great job!

Hey Michelle! I use LinkedIn to maintain my current BC network for when I graduate, build my network (working toward that 500+), and learn about companies. I found the five pillars you mentioned to be very interesting, particularly humor. On our visit, I want to ask why they picked these five pillars and how they work together. Your post has also inspired to ask what measures they are currently taking or planning to take in order to secure their unique spot in the online networking industry. Great job on your presentation last Wednesday!

Hi Michelle! Awesome presentation in class the other day and now a great article! I really enjoyed learning more about LinkedIn’s development, culture, and where they find their success. I appreciated both their five pillars and the values they work to uphold, especially “Act like an owner”. To me, this emphasizes how each member of the company actually matters and contributes toward creating the company that LinkedIn is today.
On the visit, I would like to ask more about the student component of LinkedIn. I have found LinkedIn to be beneficial in maintaining my network and discovering new content, although there are definitely restrictions (limits to LinkedIn messaging and discovering new connections) to my account without purchasing premium.

Really thorough blog, Michelle! It’s really special that LinkedIn has managed to maintain such a positive, fun, and ethical culture, particularly because one would almost expect the company culture to be stiff and purely professional given that the purpose of the company is in itself professional. At the same time, people wouldn’t scroll through the newsfeed, like posts, or enjoy using LinkedIn if it wasn’t fun.

You pointed out how LinkedIn has such a wealth of data on their users that it can use for targeting purposes. However, I’ve received job recommendations for roles in management positions or industries I have no experience in. Has this happened to anyone else? I’m curious how LinkedIn plans to improve its data analytics to ameliorate this problem.